Correlation Between CLOUDFLARE INC and Amgen

Can any of the company-specific risk be diversified away by investing in both CLOUDFLARE INC and Amgen at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining CLOUDFLARE INC and Amgen into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between CLOUDFLARE INC A and Amgen Inc, you can compare the effects of market volatilities on CLOUDFLARE INC and Amgen and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in CLOUDFLARE INC with a short position of Amgen. Check out your portfolio center. Please also check ongoing floating volatility patterns of CLOUDFLARE INC and Amgen.

Diversification Opportunities for CLOUDFLARE INC and Amgen

-0.79

Correlation Coefficient

CLOUDFLARE INC  Amgen

Pay attention - limited upside

The 3 months correlation between CLOUDFLARE and Amgen is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding CLOUDFLARE INC A and Amgen Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amgen Inc and CLOUDFLARE INC is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on CLOUDFLARE INC A are associated (or correlated) with Amgen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amgen Inc has no effect on the direction of CLOUDFLARE INC i.e., CLOUDFLARE INC and Amgen go up and down completely randomly.

Pair Corralation between CLOUDFLARE INC and Amgen

Assuming the 90 days trading horizon CLOUDFLARE INC A is expected to generate 1.53 times more return on investment than Amgen. However, CLOUDFLARE INC is 1.53 times more volatile than Amgen Inc. It trades about 0.11 of its potential returns per unit of risk. Amgen Inc is currently generating about -0.05 per unit of risk. If you would invest  7,344  in CLOUDFLARE INC A on September 23, 2024 and sell it today you would earn a total of  3,086  from holding CLOUDFLARE INC A or generate 42.02% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

CLOUDFLARE INC A  vs.  Amgen Inc

CLOUDFLARE INC A

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in CLOUDFLARE INC A are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile technical and fundamental indicators, CLOUDFLARE INC unveiled solid returns over the last few months and may actually be approaching a breakup point.

Amgen Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Amgen Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's technical and fundamental indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with CLOUDFLARE INC and Amgen

The main advantage of trading using opposite CLOUDFLARE INC and Amgen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CLOUDFLARE INC position performs unexpectedly, Amgen can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Amgen will offset losses from the drop in Amgen's long position.

The idea behind CLOUDFLARE INC A and Amgen Inc pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.